UPDATE 1-Givaudan FY sales and profit up 6%, confirms guidance

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ZURICH, Jan 24 (Reuters) - Fragrance and flavour maker Givaudan is on track to reach its 2020 guidance after net profit and underlying sales rose around 6% last year, helped by strong growth in its fragrance division, it said on Friday.

Givaudan, which develops tastes and scents for customers in the consumer and luxury goods industry, has been benefiting from its focus on natural ingredients and health and wellness products, but also recent trends requiring new flavours like plant-based foods.

“The company continues to implement price increases in collaboration with its customers to fully compensate for the increases in input costs,” Givaudan said in a statement.

Net profit rose 6.0% to 702 million Swiss francs ($725.6 million) in 2019, while organic growth, excluding acquisitions and currency swings, accelerated to 5.8% from 5.6% a year ago.

The gross margin declined to 40.8% from 42.1% in 2018, due notably to the lower margin of recently acquired Naturex.

Sales in the fragrance division rose 7.3%, boosted by strong demand for fragrances for consumer products in the Americas, while sales in the flavours unit were up 4.5%, dragged down by a weak performance in North America.

Givaudan confirmed its mid-term target of 4-5% sales growth and said it wanted to maintain its current dividend practice.

It proposed to pay out a dividend of 62 francs per share for 2019, a 3.3% increase over the previous year.

$1 = 0.9675 Swiss francs Reporting by Silke Koltrowitz; Editing by Michael Shields